Forman Company has contracted to build a dam over a period of 4 years for $3,000,000. Information relating to the performance of the contract is summarized as follows:

2013 2014 2015 2016

Construction costs incurred during the year $ 300,000 1,100,000 863,000 837,000

Estimated costs to complete 2,200,000 1,400.000 837,000 --------------

Billings during the year 280,000 870,000 1,030,000 820,000

Collections during the year 270,000 875,000 1,010,000 845,000

1, a Compute the profit or loss for each year of the contract under the percentage-of-completion method.

2013

2014

2015

2016

1.b Compute the profit or loss for each year of the contract under the completed contract method.

2013

2014

2015

2016

2a. Prepare the relevant sections of the income statement for each year under the percentage-of-completion method.

2013 2014 2015 2016

Construction Revenue

Construction Expenses

Gross profit/loss

Prepare the relevant sections of the ending balance sheet for 2013 under the percentage of completion method.

Current Assets

A/$

Inventory

Construction in progress

Less: partial billings

Costs and recognized profit not yet billed

Prepare relevant sections of the ending balance sheet for 2014 under the percentage of completion method

Current Assets

A/R

Inventory

Construction in progress

Less: partial billing

Cost and recognized profit not yet billed

Prepare the relevant balance sheet for 2015 under the percentage of completion method.

Current Assets

A/R

Inventory

Construction in progress

Less; partial billing

Costs not yet billed

Current liabilities

Provision for loss on contract

b. Prepare the relevant sections of the income statement per year under the completed contract method

2013 2014 2015 2016

Gross profit/loss

Prepare the relevant balance sheet for 2013 under the completed contract method.

Current Assets

A/R

Inventory

Construction in progress

Less: partial billings

Excess of costs over related billings

Prepare the 2014 relevant balance sheet using the completed contract method

Current Assets

A/R

Inventory

Construction in progress

Less: partial billing

Excess of costs over related billings

Prepare the relevant balance sheet for 2015 using the completed contract method

Current Assets

A/R

Current Liabilities

Partial billings

Less: construction in progress

Provision for loss on contract

Excess of billings and provision for loss over